Appendix, Setting Up a Consulting Business
Objectives
This appendix will help you
► identify the requirements for setting up a consulting practice
► understand the pitfalls of setting up a business
► recognize the minimum requirements for a consulting business
► identify the basics of private consulting
You have made it through the entire book and you are still excited about the prospects for the field of training and development. You’ve considered all of the options and decided that you really don’t want to work for someone else; you would like to be in business for yourself. We can only warn you that the road to financial independence in your own consulting business is a long and arduous one. We have tried over the years to encourage our students to seek a corporate position but there are still a few who go into consulting and prove us wrong. Rather than dissuade you further from this goal, we would like to talk about what you can do in order to be successful as an independent consultant.
Where Do You Start?
Before you buy your business cards and hang out your shingle as a private consultant, you need to sit back and decide exactly what it is that you’re going to offer the world as an independent consultant. If you don’t have a Ph.D. and five or more years of experience in the training field, you should probably start with a look at your own personal development. Namely, you should develop a list of personal strengths, followed by a description of the skills you could offer others through a series of workshops or training programs. What you are going to have to do is create two lists, one of your strengths in order to determine whether or not you could really make it as a consultant, and one of skills you feel others would be willing to pay for in order for you to have a successful consulting business. Let’s look at the personal strengths first.
As we indicated in the first two chapters of this book, you need to have a strong self-concept as an initial starting point, whether you are going to work for someone else or serve as a free-lance consultant. Possessing this positive self-concept won’t be enough if you really want to make a career, both personally and financially, as a consultant. You must be the kind of person who is highly self-motivated, well organized, and willing to work long hours for limited initial success. After all, what you will be doing is setting up your own small business. We all know the amount of time, energy, and effort it takes to set up and establish a small business, whether it’s a neighborhood flower shop or a private consulting firm. We also know that more small businesses fail than succeed. Several colleagues of the authors remain as university professors because they are unwilling to take the risk involved in setting up their own business.
Like the small business entrepreneur, you will need a wide variety of skills that you should assess at the very outset. You will need to know something about running a small business, from the financial side to the personal allocation of time and energy. Being a good presenter or possessing public speaking skills won’t make it in the world of free-lance consulting. Someone has to go out and establish the contacts, sell the business, and follow through with a successful training program. For example, are you willing to go to a company where you have established no prior contacts and talk to them about a training program that they may not perceive as being needed? If you’ve had any experience in the field of sales, you will be more successful at setting up your own business. If you don’t like selling, you may need to think twice about consulting, learn how to sell, or find a partner who is good at selling.
Perhaps the best way to determine whether you have the personal skills necessary for free-lance consulting is to serve as an intern or work for a private consultant. Find someone in your community who has his or her own training company and work for that person for a period of time to see whether this is really something you want to do on your own. If you are still going to school full time, you might check with your department to see if such internships exist so that you can gain that opportunity. Even if they don’t have a continuing internship, you can go out and develop one for yourself. This internship experience will prove invaluable when you are ready to go out and set up a business. Trainers should be more than willing to take on a “free” intern even though you are no longer in school.
The second key area that is important for you to assess at the very outset is what you have to offer others by way of training. When time management was first popular, a number of people jumped on the bandwagon and began offering time-management program for clients. Certainly, you can’t be successful by going out and offering time management or stress management as your personal skill. We are not saying that you can’t work in an area where other consultants already practice, but you do need to find something within your background and/or training that makes you unique as a trainer. This is particularly important for the trainer who wants to offer training without a Ph.D. or advanced graduate work, or has not had a career of five or more years as a successful trainer. If you offer the same services as other trainers you should be the best (at least better than the competition).
We do not believe that there is magic in a Ph.D. We do believe that the Ph.D. has high credibility for many potential clients. It can get you in the door of a company: then your experience with other clients becomes your best motivator. The Ph.D. or terminal degree also proves to the potential client that you have the ability to do research, stick to a task, and complete a rigorous plan of study.
The personal assessment table on the next page gives you an opportunity to fill in the blanks in both categories in terms of personal strengths, as well as skills you would like to offer others. We would encourage you to pause and complete this table to ascertain whether you are ready to go into the field of private consulting.
Once you have determined that you are ready for the world and the world is ready for you as a consultant, you need to take a look at your financial statement and decide whether you have the financial assets necessary to launch your own business. If you have a full- or part-time job, you might ease into the consulting business without a great deal of personal and financial sacrifice. If you don’t have a job, you ought to have enough money to see yourself through the initial start-up phase of a consulting business. How long is this initial phase? That totally depends on your drive and your ability to sell the kinds of consulting programs you will be offering. You ought to be prepared for at least a period of three months without income from your consulting business. It will take this long to establish contacts, set up consulting schedules, and offer your initial round of training. Many of our colleagues recommend having at least one year’s salary, if not two, set aside to see you through the lean times. We have a colleague who had $10,000 set aside to open her consulting business. She opened an office, got stationery and equipment, and developed a brochure. She advertised her workshops on radio and closed within five weeks. Why? The advertising produced no business and there was not enough funding to sustain her program.
Even having the financial means to last three months or more will not be enough, as you will need to invest funds in various kinds of materials. We will discuss this a little bit later when we talk about what it takes to set up your consulting business.
The final thing you need to do in order to get started is to prepare at least a short-term goal statement. Included in that goal statement should be the answers to the following kinds of questions. The list is not all-inclusive, but certainly reflects some of the key factors you should be considering.
- Do you want to consult on a full-time or part-time basis?
- Are you willing to devote a lot of time to travel for your consulting practice?
3. Do you plan to train alone? Do you want to work in partnership, or as part of a larger team?
4. What sort of consulting business do you envision three to five years down the road?
These are but a few of the many questions you should be asking yourself as you get started in your own consulting business.
If you have made it this far, you are probably ready to undertake the first and perhaps most difficult task of all in private practice: finding someone to sell your services to. It won’t take long to realize that putting your name in the telephone directory or hanging up your shingle as Jane Doe, Communication Consultant, won’t bring the horde of business you had hoped for.
How Do You Find Clients?
We are going to start our discussion on finding clients by turning to the area where we think it’s the easiest, and we will end this section with the most difficult client-seeking endeavor: making a cold call to a business or professional organization.
You begin your search for clients right in your own backyard, literally. You should turn to your neighbors, to your colleagues, to those folks who attend the religious and/or civic organizations of your choice. These are all good sources to seek out clients for your consulting business. You may not have discovered, for example, that your neighbor happens to be a pilot for a major airline who could put you in contact with the director of their training program. A member of your own church or synagogue may be a vice-president or middle manager of some organization that could certainly use your skills. If you haven’t joined one of the multitude of civic organizations, such as the Chamber of Commerce or a speakers’ bureau, it doesn’t hurt to belong to these organizations as they, too, provide contacts for potential clients. In other words, you should start with the people who you know best, discuss with them the kind of business you are making available for their respective organizations, and, frankly, ask them to do you a favor and put you in contact with decision makers in their organizations. If it bothers you to “use” your friends for this purpose, your chances for success in private consulting are going to be extremely limited. We even know of colleagues teaching at various universities who take advantage of students and their contacts, even their parents. for potential business. Personally, we would caution you about taking advantage of the student-teacher relationship, should that be your avenue to potential consulting. On the other hand, you can let your own ethics guide you once the student-teacher relationship is over and your former student (or teacher) is willing to discuss with you the various consulting skills you have to offer.
As a transition to other contacts, it is sometimes beneficial to offer friends and neighbors your particular skills as a “freebie” for their civic, religious, or other organization. As we are sure you are aware, most organizations have weekly or monthly meetings, and often seek speakers for these meetings. A good way not only to develop your skills but also to establish contacts in the consulting world is to offer a half-hour training session to the civic or religious group. You can then use that contact to talk about other kinds of training you have available, for which you would naturally charge the client. Every successful private consultant has, at one time or another, offered freebies in order to attract further paid business. You can even donate your training as an item for a civic auction.
In addition to your personal contacts, you should begin thinking about new and varied professional organizations you should belong to. If you are currently teaching or working in some other organization, you probably belong to such groups as the Speech Communication Association, the Society for Professional Engineers, or some other academic or professional group. These organizations are good for your own individual professional growth, but you now must look beyond that in order to establish yourself as a professional free-lance consultant. There are a number of organizations we would suggest you consider joining.
The first and perhaps the most important organization to help you establish a professional network is the American Society for Training and Development (ASTD). This national organization links trainers who work for various businesses and organizations with those who are private, free-lance consultants. This can aid you in at least two ways. First, it will provide you with an opportunity to see what is currently in vogue in the field of training and development. Second, it will connect you with those in-house trainers who, from time to time, need the expertise and training programs offered by a free-lance consultant. Thus, by joining ASTD, you are developing a network both nationally and at your local level to broaden those personal contacts we have already talked about. Yes, you should join the local chapter as well as the national association. If there is no other single organization you can afford to join, ASTD would receive our strongest recommendation. This organization offers you more as a trainer than a professional academic organization that represents your training content.
Depending on the type of consulting you plan to do, you may want to join the National Platform Speakers Association or the National Speakers Association. Both of these groups provide for individual growth of their members, as well as a network for organizations seeking to hire individuals as speakers. You should be aware that both of these groups are designed primarily for the person who wants to serve as a keynote speaker, rather than to provide a week-long, or even day-long, seminar on a particular topic. People like Lee Iacocca and other nationally known speakers benefit from affiliation with this type of group. You can benefit from being a member of these groups because you come in contact with successful national speakers, as well as people who might use your particular skills.
Essentially, then, these are the organizations you can join that will do you the most good professionally as a free-lance consultant. There are a number of other organizations we would also like to suggest, depending on your location and how successful your community is at attracting convention business for various business and professional groups. Should you be in a community that has such services available, we would recommend two other groups you might consider.
First, join the Chamber of Commerce of your own community, this will give you another opportunity to come in contact with the business and civic leaders who might avail themselves of your service. Obviously, if you live in a small town, joining such a chamber could be good for you socially, but it may not provide you with the professional kind of contacts you need.
If you are in a relatively large community or in a location that attracts conventions, you may want to join the local Convention Bureau. This will give you access to the names of organizations, as well as the contact person for the groups, that will be establishing conventions and professional meetings in your own community. The announcements of these meetings go many years-up to a decade or more-in advance, so you have an opportunity to call or write the contact person for a particular group for which you may wish to provide training.
Following our own advice, we noted recently that a national organization was holding a series of training programs around the country, one of which was going to be in our hometown. After a telephone call and a meeting, we provided several days of training for the group, and established training programs in other cities that followed over the succeeding months. Needless to say, one or two such contacts and a series of seminars will more than pay for the fees assessed by the Convention Bureau or Chamber of Commerce. As we move through the list of suggestions, you will begin to see that the ease in contacting and securing clients lessens. We presented our most viable options first, and as we move through the list the options will become somewhat less viable.
The third way to find a potential client is to check out announcements in your local newspapers for what are traditionally known as “requests for proposals.” If you check the classified section of your newspaper, you will find listed from time-to-time various governmental organizations that are requesting proposals on particular types of training that they need for their organizations. Over the years we have been 50 percent successful in responding to these requests for proposals from various local and state governmental agencies. Needless to say, responding to a request takes time, in that you have to draft a proposal before you can really even be considered by the organization. You might be better off using your personal contacts or your professional affiliations as described earlier, rather than blindly responding to classified ads.
We would, however, suggest that you might use the opportunity of a request for proposal as one to establish contact with the requesting agency. It is beneficial to contact the various agencies and describe to them the kinds of services that you have available. You may not be successful on a specific proposal request, but your materials as well as your name will be on file with the agency. Many times, three, four, five months down the road, a government official may recall that you offer training on a specific topic and give you a call for training in that particular area.
The least successful and the most difficult way to find clients is to make a cold call or send a letter to a business where you have no personal or professional contact. If you choose this direction, it would behoove you to research the business and find out the names of people who are in decision-making positions before you send that letter “to whom it may concern.” It is far better and more impressive if you can address your letter specifically to the person who might be in charge of training, rather than to say, “Manager, Human Resources.”
You should expand your thinking in this category to go beyond the various businesses, manufacturers, and governmental organizations in your community. We have done a number of training programs for professional organizations like the International Court Reporters Association, the Arizona Bar Association, the American Management Association, and other professional groups. Most every profession holds an annual meeting where either their members or their spouses like to receive some form of continued education. Certainly, the kinds of skills you have to offer could fall into this category very nicely.
You should also look to the hotels and large motels that may be in your community, particularly those that offer convention services. We have discovered that the meeting managers at these hotels and motels are constantly asked by professional groups to recommend trainers in a particular topic for their members. If you have established contact with the hotel meeting manager, you may be called upon to provide training for a professional group.
We do not want to leave this discussion of finding clients without highlighting a couple of miscellaneous areas that can prove beneficial at times. We have made contacts with professional organizations simply by using the time spent on airplanes and at cocktail parties to talk a little business. Even if you are on a long flight and don’t feel like talking, you might find it beneficial to talk to the people around you about their businesses: it may even lead to a discussion of training needs. Obviously the same goes for parties you may be attending. In both cases. don’t make a bore of yourself by constantly discussing what you have to offer. You have to use some moderation in presenting yourself and your services to the public.
In conclusion, we would offer one more word of advice in seeking clients. Once you have offered your first, second, or third training program, make sure you follow up with the participants to determine the long-range effectiveness of your program: we talked about this earlier in the chapter on evaluation. In addition to evaluation, however, use the follow-up as an opportunity to suggest other kinds of training programs that you may have available, as well as to provide business cards or information that the former clients can pass on to their friends. Nothing helps your consulting practice more than a referral by a motivated customer. We find that most of our business comes from the referrals of satisfied clients.
Now that you have begun to find clients and you have decided what it is you are going to offer, you need to consider such things as office space, equipment, and materials. In the next section, we will talk about these kinds of needs.
What Office Space and Equipment Do You Need?
The well-equipped office of a private consultant can range from the immaculate top-floor suite of a downtown high-rise to an answering service or even an answering machine in one’s own home or apartment. The bottom line is having just enough to make your business successful. Though many private consultants start out with a phone answering machine, we would recommend that you begin with an answering service if you cannot afford to have an office and a staff. The answering service will generally provide you with a mailing address and someone to answer the phone on a full-time if not 24-hour basis. Be certain that you shop around before hiring such a service as some are more efficient not only at answering your calls, but also at providing you with a record of all calls that have been received. Ask to see a list of clients that your answering service responds to before you select and finalize a contract. You will want to make certain that they don’t answer the phone for another service, or that the location will provide bad publicity because it is also the mail drop for various kinds of unsavory business endeavors. The last thing you want is to see the address of your answering service listed on nationwide television as the mailing point for some kind of TV-advertised product.
We have suggested you use an answering service rather than an answering machine or voicemail because your potential client is leaving a message with a human being. Most people prefer direct contact. An effective answering service can project an image of success, of your being a busy consultant. An answering machine or voicemail, on the other hand, can leave an impression of a less than successful practice. An answering service telling callers that you are not available at the moment is more professional than a taped message saying the caller should leave a name and number at the tone. And if you leave the office and fail to turn on the machine during normal business hours, your image suffers even more. The cost of an answering service will vary, but it is well worth the expense. Make sure that you check out the quality of the service before you make a commitment to a long-term contract. You don’t want an inept answering service to say “Acme Pest Control” when answering your phone call.
As your business begins to increase you will need to consider maintaining some kind of an office. Again, the type of office can vary from a small, shared space to the top-floor suite. Unless you have space dedicated in your home for an office, we would encourage you to find some kind of place where you can go to work and make phone calls. Until the time that your business grows, you could still use the answering service and its address rather than the address of your office. This will give you an opportunity to work in an inexpensive location, be it your home or a shared office space, and still maintain the answering service for the prestige address in a desired location, even though your office may not be there.
Having established an office, we would encourage you to continue meeting potential clients at their locations rather than yours. This serves two purposes for the betterment of your business. First, it shows that you have a true interest in their business, and it gives you firsthand experience in the client’s operation. Second, it allows you to have a smaller, less prestigious office in order to keep your overhead low.
Once you have an office, another consideration is whether you need additional space for equipment, supplies, and possibly even for meeting rooms. Frankly, this is an issue you need not address until you have a full-time consulting business and can afford to have such elaborate space. We would certainly recommend that as you begin considering the need for meeting rooms and additional space, you try to find space in the same location as your office. The last thing you want to do is constantly change the address and phone number of your consulting business, as it makes a bad impression.
We do believe that some credibility can be gained by the placement of an office, or even the answering service that you select. If one area of your community is better known for business and professional organizations, you might look to that location for your answering service and ultimate office needs. This will add to your credibility, and will put you in the same environment as your potential clients.
Once you have determined your office and space needs, you need to think about the kinds and types of equipment you will need to operate your business. We suppose it goes without saying that your first priority is a telephone. Beyond the telephone, there are a number of options for equipment you should purchase or at least have at your disposal on a per-use or rental basis. We will discuss these in their order of priority.
If you have read the rest of this book carefully, you will know that the computer ranks highest on our list of equipment needs, whether you are a private entrepreneur or an in-house trainer. Obviously, we think the computer is going to become the focal point for the successful trainer. The type and capacity of the computer is both a reflection of your current and future needs and your current financial obligations. As we said in chapter 9, we would encourage you to have more capacity than you feel you currently need so that you can grow into the computer rather than having to replace it because you selected an outdated, obsolete piece of equipment in the first place. Computers are quickly becoming multi-media in their applications. The price of computers is such that you could probably, in today’s market, equip yourself with a computer, all of the necessary software, and a printer that would produce letter quality materials for approximately $1500.
Beyond the computer, there are several types of equipment that you should at least have at your disposal. The first we would recommend, again depending on the type of consulting that you plan to do, is a video recorder, monitor, and camera. If you are interested in any aspect of communication as the basis for your training, video equipment will certainly prove to be invaluable. We do not recommend specific equipment, but we would recommend that you look into a VHS system as opposed to some of the others that are available. However, the video market, like the computer market, is undergoing rapid change with the miniaturization of video equipment to the point where we will be using quarter-inch videotape instead of the current half-inch tape. This technology is moving forward in leaps and bounds so the most we can recommend in the area of video is that you consider the state-of-the-art at the time you decide to buy or rent equipment. Keep in mind that within a year or two you may find what you have to be obsolete, but still functional for many years to come.
After video equipment, you should make certain that you have access to a good copy machine. Many potential clients want to receive copies of proposals as well as samples of previous training materials you may have used. As such, you should find a good copy service that is not only reasonable and speedy, but also provides quality copies that will enhance rather than detract from your credibility. Unless you are a full-time, highly successful consultant, you will probably not need to purchase your own copy equipment.
In chapter 8 we talked about the various kinds of audiovisual equipment you can use to enhance your training materials. Like the copy machine, audiotape recorders, overhead projectors, slide projectors, and other such audiovisual materials are things that you could rent rather than purchase. (Probably because at one time or another they were students or had an interest in music, most consultants own their own tape recorders and CD players. You probably fit into this category. You can use them for many training purposes.) Overhead and slide projectors are a bit expensive and you may want to consider either building the rental fee into your training fee, or asking your client to provide such equipment for you. You can use the computer video adapter that we discussed in chapter 8 if the audience is not too large.
There probably is no other equipment that you would need for your consulting business unless, of course, you are doing dictation, in which case you may want to have some kind of dictating machine and playback unit. We believe that after the purchase of a computer or at least the rental of one, most of your capital should be invested in material needs for your business, a topic we would like to discuss
What Materials Do You Need?
Essentially there are three items you must have before you even start conversations with the first client. You should have designed and produced a good business card that is coordinated with your stationery. You can design these items yourself or you can hire another entrepreneurial consultant to design your cards and stationery for you. Either way, we would recommend that you find something that is not only unique, but also makes a good, strong, first impression. Stationary that looks like it was designed on a copy machine will certainly not add to your credibility. Remember, your business card and stationery not only help you make that initial impression, but also help form a lasting impression, since they stay behind after the contact.
At some early point in your business, you should design a professional-looking brochure that can be used to advertise your services. We would recommend a brochure that allows for inserts so that as you expand your business and offer new and varied services, you will not have to scrap the initial brochure, but rather can add and delete inserts as your organization changes. To get an idea of what you might do, we would recommend that you check around at various printing houses to see the kinds and varieties of products they have produced. They will also give you some ideas for stationery and business cards.
The next item you need by way of material comes as your business begins to grow. We suggest that you keep on file a portfolio of programs and letters of response to your programs. Many new clients want to know how others have responded to your training, so if you have letters on file in a portfolio, it’s an easy task to show them these evaluations. You should also keep copies of any news releases and other publicity materials in that portfolio.
The last material need we have hinted at earlier when we asked you to make a personal assessment of finance. To say that you will need cash, and lots of it, may be an understatement. Once you have provided financially to live for a period of two, three, or four months, you will need an additional cash supply of $1,000 or more to provide for stationary, brochures, business cards, computer and office related needs. It doesn’t take long before that $1,000 becomes $2,000, $3,000, or as much as $10,000 to get your business of the ground. A bare-bones budget of at least $1,000 will be necessary to cover answering service, computer (partial payment), and materials needs.
Now that you have established your business and begun to look for clients, one of the first questions you ask yourself and in this case are asking us, is “Do you advertise and, if so, how?” We would answer the first question by saying that it is totally up to you. To advertise or not advertise is largely a function of the services you have to offer. We are going to make some suggestions, though, that allow you to advertise without paying for a display ad in the local newspaper. We think that these forms of advertising will do you more good in the long run than putting down a large chunk of money for a straight commercial ad in a newspaper or magazine. What are they?
One of the best forms of advertising is to get your name in the newspaper as often as possible. No, we are not suggesting you rob a bank or steal a car; rather, you should be submitting articles to the newspaper, as well as contacting the feature editor for special stories. You should plan short articles that offer perhaps a unique perspective on some of the national events in your specialty or special-interest articles on your specialty in a given population. For example, if you are interested in promoting workshops and training programs in interpersonal communication, you might call up the feature editor and propose a story on interpersonal communication and the increasing crisis of suicide. The feature-article writer would then interview you on a story relating interpersonal communication and suicide.
As a parallel, you should look into appearances on local radio and television talk shows. Many larger communities have stations whose format is devoted to evening talk shows that are constantly looking for people to appear as guests. Develop a list of topics you are interested in talking about and submit this to the producers of the various talk shows so that they might schedule appearances. You will be surprised the number of clients you can pick up from appearances on radio, television. and even in the newspaper.
Aside from these free forms of advertising, you can also use brochures and special-interest fliers to spread the word on your services. We strongly urge that brochures and fliers be made available to trainees at the end of each and every workshop so that the trainee and the flier can serve as advertising for your services. In essence we are saying that you really don’t have to pay to advertise if you take advantage of the media that are at your disposal in your community. Media look for stories and, with a little creativity on your part, you can provide the stories and at the same time gain free publicity, which can be turned into contacts with potential clients.
How Much Do You Charge?
Unless you have had some experience working with a consultant or have had contact with those who are doing consulting, the biggest question you have in mind is how much to charge. Our off-the-cuff response is that you charge all the market will bear, but that may be a bit facetious. We stressed in chapter 4 the need to do a needs assessment before providing training, and we would encourage you to take that same advice before deciding how much you should charge for your services. There are a number of factors you should keep in mind as you begin to develop some kind of flexible pricing structure.
The most important consideration is that you want to be competitive with other consultants in your marketplace. If you provide services and your price is much lower than your competitors, you will be viewed as perhaps not as credible as those around you. Some potential clients will feel that if your prices are that low, you can’t be that good. At the other end of the continuum, you shouldn’t charge too much. Word spreads quickly among potential clients if you are overcharging, particularly if you are not offering full value for the money.
Where does that leave you with regard to pricing? The best we can do is to give you a range of what private consultants are charging. This range goes from a low of $100 to $200 a day to as high as $5,000 to $10,000 a day. Those at the upper end of the continuum are obviously nationally known. highly in demand consultants who are probably worth every penny of the $10,000. Those at the low end of the continuum are those with little experience and perhaps new to the market. Where you price yourself should fall somewhere in between.
One way to determine a fair market value is to look to the charges paid to other professionals, such as accountants and lawyers. Using an hourly fee charged by other professionals gives you a benchmark.
There are other factors in addition to what others are charging and what you are worth that should go into your pricing policy. We have always felt that you need to calculate the amount of preparation time, the amount of materials that you are going to have to pay for, and the length of your training program into your ultimate pricing structure. In other words, we might charge a client less for a training program if we know and can be somewhat assured that we will be doing a whole series of training programs for that client, rather than just a one-shot training package. We will also take into consideration the amount of travel time to and from the consultation as a part of our fee. Some private consultants charge the same price on a daily basis, whether they are training or traveling. You will have to be flexible and test out the marketplace on this issue.
You now have enough information to go out and establish your own consulting firm. The only other question you might want to consider is whether or not you work alone or team up with one or more individuals. Our preference is to have a loose collection of individuals, all of whom can work alone or as part of a team. Since we come from an academic environment, we find the intellectual stimulation of working with others to be quite useful in the development of training ideas and workshop designs. You are the best judge of how well you can work alone or with others, but there is at least one additional advantage to being part of a loose-knit team. As an individual, there are only certain topic areas in which you are qualified to consult. You will undoubtedly come across a client who may express initial interest in something that you do very effectively, only to discover after the needs assessment the client really needs training in some area outside of your specialty. By being part of a team, you can suggest how your group or other members of your group can meet the need for the client. This keeps you in good contact with the client should further consultation be necessary in your area of expertise. This also prevents you from spreading yourself too thin by saying. “Sure, we can do training in that area. What would you like?”
The last major issue we would like to consider is whether you incorporate your business. This is a question that only your tax accountant and attorney can answer with any finality. For the most part, we would recommend that you start out your business on what is considered a Schedule C for your tax purposes and then modify your operation depending on how large your consulting practice grows. In the beginning you probably do not need to file for incorporation, but as you add employees and increase the size of your budget, you will have to consider a potential incorporation. Incorporating is a big step, and it can cost you from $500 to as much as $2000 or more just for the initial incorporation papers. It will also require further support from clerical staff and even your tax accountant to provide quarterly returns for the corporation. All we can suggest is that you look into the matter of incorporation, but work out any details with a tax consultant.
Pitfalls and Positives
In case you get the idea that private consulting is a glamorous fun-filled, exciting career, we should talk a little bit about the other side so that you approach private consulting aware of all the problems you can face. The examples and points that we are going to make in this section are based upon our conversations with those who have gone the private consulting route, some of whom have returned to the more stable environment of in-house training or college or university teaching.
Most important, the world of consulting is hard work, long hours, and occasionally boring. As a first-time, full-time consultant, you may spend days making contacts trying to find that first client. Once the clients begin to emerge, you may find presenting the same old workshop on stress management to be as boring and repetitious as the job you left for consulting. We know many consultants who spend day after day, week after week doing the same type of workshop for different groups for as little as $200 a day, simply to be able to pay the rent and expenses. We know those are not the ones you read about, but they are the reality of private consulting. As with professional athletes, not every consultant brings in over a million dollars a year in business.
Another pitfall of the private consultant is that you may find yourself being pulled in a variety of directions simply to survive. Suppose you have just completed your first successful training contract on listening skills for a client and he or she asks if you also could provide training in public speaking. You may find yourself saying that you can do it. Pretty soon you may find yourself offering training in thirty different topics because you once needed the money to survive. Unless you are a super trainer, you will find yourself spread too thin to be credible in the eyes of clients. We recommend you focus your business on your area of expertise and tell your clients that you know other consultants who can help them. You maintain your credibility and respect in the eyes of clients, and you build a support network among other consultants who may return the favor. While you may lose an immediate training program, you will gain in the long run.
Another problem faced by private consultants is the amount of time spent traveling. It’s been said that it’s hard to be an expert in your own hometown. As such, you may spend hours on the road, traveling to cities far and wide to present your material, because you have not been recognized in your own community. To avoid this pitfall, you should find ways to make your travel time as productive as possible. Nevertheless, one can quickly tire of plane flights, hotel rooms, and eating meals on the road.
In case you are still determined to set out as a private consultant on a full- or part-time basis, we will conclude by looking at the positive side of the picture. There are some advantages to approaching training on a full-time, entrepreneurial basis.
Perhaps the greatest advantage is that you are the master of your own destiny. Like the small business concern. you can make or break the company on the basis of your sole efforts. If you are successful. you owe it to yourself; if you are a failure, you can take the blame. Of course, being an optimist and making it this far, you should be nothing but successful.
Being a consultant allows you to choose the kinds of clients and locations that you want. Probably we would encourage you to select only a few categories of clients or types of training programs; being a private consultant allows you that freedom. You may choose to work only with health-related professionals, rather than every type of company that exists. You may also choose to provide training only in the area of presentation skills and not be concerned so much about the type of clients that you work with. As a consultant, you can make these choices for yourself.
For some, travel, eating out, and staying in hotels can be a pitfall; for others, this can be a real thrill and challenge. If you like that kind of life, private consulting can offer you that opportunity.
So, if you have got an idea, if you like to sell, if you know how to market yourself, and if you have a financial basis from which to work for several months, then go out and take up private consulting and see how successful you can be. Like most things. if you don’t try it, it will always look like a better opportunity than it may really be. So, as we said in the beginning, start with an internship or work for a consultant, and then move gradually into the world of private consulting. Good luck.
